What is Borse Dubai?

  • The Government of Dubai is creating Borse Dubai to consolidate its exchange holdings, DFM, DIFX and current investments in other exchanges. Borse Dubai will explore synergies for issuers, investors and intermediaries between DFM, DIFX and Dubai’s other exchange investments and be a platform for expansion within the GCC and beyond.

STRATEGIC RATIONALE

Why have you used a DIFC company as the Holding company?

  • The DIFC provides greater flexibility for Borse Dubai as it is designed to provide a world class regime and operational platform in accordance to international standards and best practices. The rules and regulations governing companies incorporated in the DIFC are well developed and will provide a familiar legal platform for investors.

How will this transaction solve the issue of lack of liquidity at DIFX?

  • We expect a healthy growth in liquidity on the DIFX on a stand-alone basis as new listings and other product development initiatives are pursued. As links between DFM and DFIX are developed the ability for investors to seamlessly trade on both exchanges will be realized to the benefit of both exchanges liquidity.

What are the alternative transactions available to DFM?

  • DFM and DIFX continue to evaluate a broad set of investments and alliance opportunities.

What potential new revenue streams can be created by the new structure? Will there be new products offered?

  • Borse Dubai, DFM and DIFX have begun to explore joint opportunities to attract more listings, attracting more liquidity that in turn will generate higher revenues.  We are currently preparing a new strategy that will expand and/or launch a broad range of new products such as ETFs, REITs, derivatives and other services. Bourse Dubai will build-up and provide a full one-stop products & services offering.

Is this alignment necessary?

  • Establishing a holding company is an important step to accelerate the development of the Dubai capital markets and provide a stronger platform for regional and global expansion.

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IMPLEMENTATION

How long will it take to realise synergies? How will the operational benefits be implemented?

  • Joint teams will be formed shortly to develop a roadmap that will commence once regulatory approvals have been received. Further communication to shareholders and other stakeholders will be made in due course.

What will happen to the management of the two companies?

  • There will continue to be separate management of each company with the management of DFM reporting to the DFM Board and the management of DIFX reporting to the DIFX Board.

Will DFM and DIFX continue to compete for listings?  What happens if they are both competing for the same listing?

  • Currently, DFM and DIFX are targeting different sets of issuers. Going forward, Borse Dubai expects that both companies will develop a more co-ordinated approach to marketing to potential issuers in order to maximise the impact on their respective marketplaces.

How will the pricing be determined between the two Exchanges for services provided to each other?

  • If the Boards of DFM and DIFX consider it appropriate to share certain services, these will be charged for at an ‘arms length’ basis.

Is the timing optimal?

  • Yes. Dubai is experiencing strong economic growth and has created strong interest from foreign investors to participate in its success story. This creates the need for a well established capital market in Dubai.
  • DFM hast just entered its next growth phase with its recent IPO and has developed a new 5-year strategic plan, which will provide a strong basis for Borse Dubai’s competitive advantage going forward.

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STAKEHOLDERS

How will this transaction affect the employees of the two exchanges?

  • Both exchanges will continue ‘business as usual’ operations while Borse Dubai, DFM and DIFX will explore ways to realise the synergies that exist from running two exchanges in a coordinated manner.
  • As it builds a leading exchange group, Borse Dubai’s priority is to retain good talent and to attract new high-calibre employees

How will this transaction affect the local issuers on DFM?

  • The transfer of the government’s ownership in DFM will not affect day-to-day operations at DFM
  • Borse Dubai and DFM will continue to explore ways to facilitate access to larger pools of capital and increase public exposure/visibility of the marketplace
  • Local issuers will have an additional, alternative regulatory environment, operating according to international best practices that they can utilize to issue and list securities.

 How will this transaction affect the international issuers on DIFX?

  • Over time, Borse Dubai expects International issuers on DIFX will benefit from better access to local investors and the liquidity pool at DFM.

How will this transaction affect local investors & members using DFM?

  • The transfer of the government’s ownership in DFM will not affect day-to-day operations at DFM
  • Borse Dubai and DFM will continue to explore ways to facilitate growth of DFM’s listings base, introduce new products & services, deepen liquidity and increase public exposure/visibility of the marketplace. By offering local investors and members access to DIFX listed securities, Borse Dubai and DFM will help widen the investment horizon of local investors and enable members to trade on more than one exchange.

How will this transaction affect international investors & members connected with DIFX?

  • The transfer of the government’s ownership in DFIX will not affect day-to-day operations at DFIX
  • Borse Dubai and DFIX will continue to explore ways to facilitate growth of DIFX’s listings base, introduce new products, deepen liquidity and increase public exposure/visibility of the marketplace.

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FURTHER CORPORATE ACTIONS/SHAREHOLDERS

Will there be any further transaction/ merger of the two exchanges?

  • Once regulatory approvals have been obtained for establishing Borse Dubai, joint-teams will look at how potential synergies between DFM and DIFX can be realised recognising that both exchanges will continue to operate under different regulatory regimes.

What will happen to the minority shareholders in DFM?

  • The minorities will continue to hold shares in DFM. DFM’s Board and Management will continue to act in the interests of all DFM shareholders in accordance with the robust corporate governance processes that are already in place.
  • The alignment of DFM and DIFX, catalyzed by Borse Dubai and based on specific value propositions, is expected to position DFM favourably vis-à-vis local, regional and international exchange industry dynamics, creating more value for all its shareholders.

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REGULATION

When will the transaction be completed and what regulatory approvals are required?

  • The transaction requires approval by ESCA and the Ministry of Economy for DFM and DFSA for the DIFX. It will be completed upon receipt of the final regulatory approvals from ESCA and DFSA.

Who will regulate each entity? Borse Dubai?

  • DIFX will continue to be regulated by DFSA and DFM will continue to be regulated by ESCA.  Borse Dubai will be a holding company incorporated in the DIFC and be subject to the same regulatory requirements as other DIFC-incorporated companies.

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